Tackling Volatile Global Dynamics Will Be Key at 10th BRICS Summit

The 10th BRICS summit is being hosted by South Africa in Johannesburg from July 25-27. It will be closely watched as the world is facing extraordinary global political and economic challenges.

by
PK Vasudeva

July 26, 2018

Chinese President Xi Jinping delivers a speech titled "Keeping Abreast of the Trend of the Times to Achieve Common Development" at the BRICS Business Forum in Johannesburg, South Africa, July 25, 2018. (Xinhua/Li Tao)

Tackling Volatile Global Dynamics Will Be Key at 10th BRICS Summit

Scan with
wechat to share

The 10th BRICS summit is being hosted by South Africa in Johannesburg from July 25-27. It will be closely watched as the world is facing extraordinary global political and economic challenges. The main challenges facing the world are country-specific problems relating to domestic poverty, inequality, unemployment, climate change, environment degradation, pollution, terrorism and global economic system biased towards corporate interests for disproportionate accumulation of wealth.

One of the most immediate political challenges relates to the changing dynamics in global economic governance. The current global dynamo, the U.S., appears determined about starting trade wars with China, India and the European Union. “A trade war should be rejected because there will be no winner,” said Chinese President Xi Jinping at the opening of the BRICS summit. “We are facing a choice between cooperation and confrontation, between opening up and a closed-door policy and between mutual benefit and a beggar-thy-neighbor approach.”

Surprisingly, the U.S. is withdrawing from multilateral governance arrangements that it created. For example, it withdrew from the upcoming United Nations Conference on Migration (UNCM) and the United Nations Human Rights Council (UNHRC), and is refusing to appoint new judges at the Appellate Body of dispute settlement system of the World Trade Organization (WTO).

These developments are creating a volatile and unpredictable situation for all countries, especially BRICS. Small players on the global stage like South Africa and other countries on the continent may face collateral damage in the destruction of the current global governance arrangements.

Danny Bradlow, SARCHI (South African Research Chairs Initiative) Professor of International Development Law and African Economic Relations at the University of Pretoria, has given three suggestions for making BRICS durable – strengthen the relationship between the BRICS partners, help 46 poor African countries in their growth and reform global economic governance structures.

One goal of the summit should be to strengthen the relationship between the BRICS partners. A successful summit will result in signing of a range of substantial agreements. The world will be able to scrutinize the outcome in the communiqué released at the end of the meeting.

During the year, various BRICS representatives, government officials, civil society groups and technical experts have met to discuss issues of common interest. They have included technical groups such as the BRICS water forum and a committee looking at customs cooperation and economic growth projects.

The participants in these meetings try to reach agreements on issues of mutual interest – such as establishing a BRICS vaccine research center – or finding ways to collaborate in sectors like tourism. Their work is also to try and resolve differences.

Given that the theme for this year’s summit is “Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution,” it’s reasonable to expect the BRICS mechanism to help 46 poor African countries.

One area that would be beneficial for Africa would be a signal from the leaders that the BRICS members are willing to commit to funding infrastructure projects on the continent. This is important because Africa is in the process of putting in place an ambitious new Continental Free Trade Agreement. Successful implementation will require constructing infrastructure that can link the continent both internally and with other parts of the world.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS in Shanghai. According to the agreement on the NDB, “the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments.” Moreover, the NDB “shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.” It should function like the World Bank and the International Monetary Fund (IMF) and help the BRICS in providing loans liberally for development.

One goal shared by all the BRICS states is reforming global economic governance structures like the World Bank and the IMF. The bloc hasn’t been particularly successful in this mission. But this year may be an opportune time to promote reform during this summit.

Actions by the U.S. have undermined its leadership position in the world and may have made other countries more open to governance reforms in key international economic organizations. This is particularly relevant for the IMF, which is reviewing its quota allocations. A shift would lead to the world body being more responsive to the concerns of its poorer countries.